(bright music)
- What's up guys, Michael here.
Now, you don't have to be much of a crypto enthusiast
to know that something weird is going on with digital art
and that something is called NFTs.
See, auction house Christie's
just sold its first purely digital artwork
and the accompanying non-fungible token
for a chill $69 million.
Both art insiders and normies
were left collectively stunned.
The work in question is,
"Everydays: The First 5,000 Days",
by digital artist Beeple.
It's a composite image
of the artist's daily digital pictures
made over the course of 13 and a half years.
This wasn't the only big ticket NFT sale either.
Grimes has sold millions of dollars in blockchain art
while an NFT of a "Nyan Cat" sold
for more than half a million dollars worth of crypto.
And so since basically everyone at Wisecrack
was pretty baffled,
we started digging.
We had so many questions.
Mostly, why? Is this just a gimmick?
Or are these millionaire NFT consumers
just way smarter than us?
Did they just really want to give artists
their due with fair compensation?
And what we found ended up raising a ton of questions
about the art world.
Like why do we take for granted
the fact that a painting like this
receives bids for millions of dollars,
while a painting of me showing hole,
has, as of now received zero bids?
It made us wonder.
What if we treat Beeple's $69 million payday
as less of a novelty,
and more of a natural progression of the artwork?
One that's been underway for the last five-ish decades.
Let's find out in this Wisecrack Edition
Before we jump in, a quick word on NFTs.
NFTs are basically unique units of data on a blockchain
that are used to represent a digital item.
They act as proof of ownership of that digital item.
And some people think they're a pretty big scam.
That's because when you buy an NFT,
you're more or less purchasing a super special file
with a digital seal of authenticity that says,
"Even if this file is widely available on the internet
"it's actually you who own it."
Oh, and they're also real bad for the environment
but that's a topic for another day.
To understand the wild money being thrown at the Beeples
and Grimes' is of the world,
we need to talk about an art movement
that emerged in full force around 2011
and was soon given the scornful nickname, zombie formalism.
Let's unpack the story by starting with, what's formalism?
And what's a zombie version of it?
Here's the deal.
Formalist art critics
who really came to prominence after World War II,
believed in judging artwork based entirely on the success
of the aesthetics- colors, line, shapes,
rather than any social, political or ideological context.
So, sorry Picasso,
we don't care if Guernica is about the Spanish Civil War,
we care that it looks dope.
Some formalists like critic Clement Greenberg
also believe that
art that represented actual things or people
was inherently inferior
to the more pure abstract expressionism
exemplified by the likes of notable paint-dripper
Jackson Pollock.
These abstract works, it was thought,
reached for a higher kind of truth.
That said, Greenberg's views started
really falling out of favor in the late '70s
as high art people became increasingly preoccupied
with contextualizing artwork
in all the ways Greenberg hated.
So for instance,
you'd have someone like Jean-Michel Basquiat
being discussed and celebrated
for the ways they used symbolism
and commented on the art world at large.
Fast forward a few decades,
and we can get to the zombie part of zombie formalism.
These mostly young artists reviving
a decades old way of thinking about and making art,
but as a shell of its former self.
In the vein of their predecessors,
they were focused on technique, color, and composition
more than symbolism or context.
It was also characterized by what art critic Jerry Saltz
describes as, "The illusion of true originality."
The movement was fueled by first,
like the first painting made via electroplating
or the first painting made via fire extinguisher
which, okay, sounds pretty cool.
Saltz notes that the art felt new and dangerous,
but not too much so.
It also seemed cerebral,
and was tailor made to look good
in wealthy people's fancy contemporary homes
and on Instagram.
The paintings all looked pretty similar
in their simple elegance,
exemplified by Lucien Smith's rain series.
They could also generally be made very efficiently
and sold like $100,000 hotcakes.
Newbie art collectors,
many of whom hailed from the finance world, loved them,
and were excited to speculate wildly on artists
whose street cred seemed to be majorly on the rise.
Though they're aesthetically super different,
it's hard not to see some surface similarities
between the current NFT bonanza,
and this art moment at its peak.
Let's take a close look at the imagery
that actually constitutes Beeple's
"Everydays: The First 5000 Days" art.
Keep in mind. Each of these individual tiles
is now technically worth nearly $14,000.
As one Artnet journalist notes,
the images include a lot of porny cartoons
and ironic political caricatures
that seem to be aiming for edgy,
but end up more in the camp of memes
your boomer dad might forward
after two-for-one margarita hour at Chili's.
It has tones of subversiveness.
If watching Lincoln spank Trump strikes you
as particularly subversive,
yet doesn't appear to possess a clear ideology.
Many of the works could best be described
as different kinds of racist or sexist (beeps) posting.
It also pulls pretty shamelessly
from meme-y internet aesthetic seen on
Tumblr and DeviantArt.
And look, I'm not a monster,
I love weird internet art and I love memes
but when exactly is a meme worth 14 grand?
Beeple's work was tailor made for internet consumption
and in many cases clearly dashed off pretty quickly.
In fact, Beeple told Insider
that he never expected to sell a piece of his digital art
for more than $1,000.
Like many works of zombie formalism,
"Everydays" is ultimately most remarkable
for two completely non artistic reasons:
A, it's novelty.
Here as the first purely digital art piece
to make it through the gold standard
of industry art auctions and B,
it's resulting price tag.
The same could be said of "Nyan Cat",
which is like old internet novelty
wrapped in new internet novelty,
a novelty case Nyan if you will.
Now, it may not seem unusual these days
to judge art primarily by its market value,
but just a few generations ago
such a perspective would have been virtually unthinkable.
That's because the idea of defining
and measuring the true value of art by its price,
i.e. as a commodity, is relatively new.
As curator Henry Geldzahler noted,
abstract painters who honed their craft
in the '40s and '50s
were more focused on projecting the imminence of God
in their work,
then eeking out a high price point.
Though many artists were still aware
of the patron class they were appealing to,
and the monetary worth of their work,
this kind of calculating was considered distasteful
and thus kept private.
Art collectors in turn were focused on say,
building an aesthetically pleasing collection of work
you could show off to friends at dinner parties,
or show off to the world by loaning it out to a museum.
It wasn't primarily about the monetary value
of the art itself.
This began to change somewhat drastically
in the early '70s with the meteoric rise
in the value of Pop Art,
a movement that had been since the 1950s
preoccupied with the notion of branding and commodities.
Exemplified by Andy Warhol,
these artists honed international brands
and their work increasingly began attracting
more investment-minded collectors.
Of course, as sculptor Richard Serra notes,
artists like Warhol simultaneously branded themselves
while mocking the media that perpetuated those brands.
That is, there was a subversiveness
to this ethos of commodification of art.
However, the criticality and subversiveness
that Warhol embodied
has been, according to Serra, lost.
And that loss began in earnest in the '80s,
as art along with just about everything else
became fully commodified.
As art historian Tiernan Morgan argues,
"The art world as we recognize it today
"was largely manufactured by the decade's commercial prowess
"and we're still grappling with its fallout."
This sea change was in part
due to the economic surge of money belonging to the top 1%.
It was also due to increased marketing efforts
by auction houses and the meteoric rise
of galleries and art fairs.
By the mid '80s,
front page stories about despicably expensive auction sales
constituted much of the media's coverage of the art world.
This mindset that art equals money,
would only become more entrenched
at the turn of the new century.
At this point, according to art expert Michael Findlay,
"Serious critical discourse was drowned out
"by the noise of the marketplace."
At the same time the typical artist
has become increasingly preoccupied
with creating, maintaining,
and increasing his or her market.
Whereas many artists in the '60s like Edward Kienholz,
roundly mocked the very idea of commodifying art in general,
many artists have now become comfortable seeing their work
primarily as commodities to be bought and sold.
Indeed, one of the fallen stars of zombie formalism,
Lucien Smith,
admitted recently that his time in the spotlight
was about sucking up to collectors
and trying to sell for the highest prices.
He now laments,
"That stuff isn't real. That's not art."
So we might ask,
"Is it Grimes or Beeple NFT really worth millions?"
But it's kind of the wrong question,
one fueled by an art market
cynically concerned with price rather than merit.
Fittingly, as art became more commodified,
collecting art became increasingly less
about amassing a pretty collection of Monets
and more about creating a pretty investment portfolio.
Nowadays, much of art is bought only to be stored
in high-end international warehouses,
far away from the homes and walls of the buyer.
All of which is to say,
these days the price of an artwork is the point.
This has perhaps never been more clear
than in another recent blockchain purchase:
That of a Banksy painting.
After purchasing the NFT for a work
by your favorite rat portraitist,
the new owners proceeded to burn the original painting
in order to ensure the exclusive value of their token.
The breathless media coverage
is probably just a happy side effect, right?
Anyway, here we see how the price of the commodity,
i.e. the NFT, trumps all,
even the cultural worth of the original,
tangible work of art.
So now that we know how the art market
became a commercialized mini horror show it's worth asking,
how does the market set a price for a piece of artwork?
The answer:
Pretty randomly.
As art critic Robert Hughes put it,
"The price of a work of art
"is an index of pure or rational desires."
Part of this has to do with the auction setting
which is literally designed
to foster reckless, spontaneous decision making.
Notably, while Christie's
will typically set an estimated value,
they chose not to on "Everydays"
because of the novelty of an NFT.
As a result, the sky quite literally was the limit.
As prices in an auction climb, so does excitement.
As Findlay notes,
"People are lured by art
"that because it was expensive, presumably must be good.
"Often this reason replaced meaningful scrutiny
"of the object."
There's another factor
that makes certain big ticket pieces of art worth more money
than God.
As Christie's estimates,
there are approximately 150 collectors in the world
with the means and desire
to spend more than $20 million on a piece of artwork.
And I'm sad to say, not one of them is my friend.
Many of these investors,
hardly art experts in and of themselves,
rely on the help of seasoned art advisers
who tend to have relatively homogenous taste.
As a result, as scholar Olav Velthuis explains,
"The art market functions
"as a big consensus marketing machine."
That is to say, it runs primarily on hype.
Art advisors keep track
of which artists brands are currently favored
by powerful curators, collectors, and museums.
And as Velthuis concludes,
"Because everybody is to some extent at least,
"looking at the same signals,
"at one point they start agreeing
"on who are the most desirable artists."
As a result, top collectors tend to gravitate
towards the same artists and works
or the same trends,
thus driving prices super way up.
Of course, that might explain the exorbitant price tag
on say, a Jeff Koons pile of Play-Doh.
Before you scoff,
please note that this is a real art piece that was purchased
for over $22 million.
But "Everydays" doesn't exactly strike you right away
as being the kind of art that advisors
would stake their reputation on.
So, color us still mystified.
That said, there are some consistent trends
that tend to ascribe particular value
to certain pieces of art.
Also fun fact:
Blue and red paintings inexplicably tend to sell for more
but overall scale tends to be a huge determinant
in the value of art.
If you want to sell something for millions of dollars,
it better command a lot of wall space.
Obviously "Everydays", composed of 5,000 images
is the digital equivalent
to taking up the entire wall of a museum.
Another big factor is novelty.
As we saw with zombie formalism,
the novelty of an art purchase
can also intrinsically give it value.
In this case, the prospect of being the first collector
to buy an NFT from a major auction house,
no doubt played a role in the month long bidding war
that drove the price up to,
again, and I cannot stress this enough, $69 million.
But there's also the matter of self interest.
One of the big reasons that certain artists like Andy Warhol
have become worth so much,
is actually a little bit sketchy.
Art collectors who already own a couple of Warhols
might bid incredibly high on the next Warhol
that comes up at an art auction.
That's because doing so helps the Warhol brand
in the eyes of the art world,
consequently inflating the value
of their preexisting soup can collection.
Of course, their old Warhols
didn't suddenly improve in quality.
Curator and dealer Kenny Schachter,
notes that this phenomenon was especially prevalent
during the era of zombie formalism,
saying, "There was definitely price manipulation
"at the beginning,
"with investors bidding up the works at auction
"to the of thousands of dollars."
We suspect something similar,
though way more expensive is going on
with the sale of "Everydays".
The two buyers Vignesh Sundaresan AKA Metakovan,
and Anand Venkateswaran are cryptocurrency entrepreneurs.
Sundaresan started Metapurse
AKA a crypto-exclusive fund
that specializes in identifying early stage projects
across blockchain infrastructure, finance, art
unique collectibles, and virtual estate.
That's a fancy way of saying,
"We invest in nice digital (beeps)."
Metakovan already bought several other art pieces by people
months before the recent auction.
He subsequently divided ownership of this body of work
collectively called B-20
and sold shares of them publicly via B-20 tokens.
But here's where it gets kind of juicy.
He kept 59% of the tokens for himself
while his favorite business partner, one, Mr. Beeple,
owns 2%.
Independent crypto journalist Amy Castor,
argues that the purchase of "Everydays"
thus represented a consequential conflict of interest.
She postulates that
it was all probably a mere publicity stunt to, A,
publicize Metapurse and the whole package B-20 package
and B, increase the value of that package,
i.e. the rest of Metakovan's, existing Beeple's collection
thus making B-20s more valuable
and a much more exciting investment opportunity.
After the sale of "Everydays",
the value of a B-20 coin shot up
from just 36 cents in January,
to $23, though it has since dropped to $7,
but still, it's not small bananas.
The two buyers have since issued a statement,
claiming that this purchase was intended
to show Indians and people of color
that they too could be patrons.
That crypto was an equalizing power
between the West and the rest,
and that the global south was rising.
So if it increased their collections values
that apparently is just a happy side effect.
Anyway, does all this mean that NFTs are the future?
A slew of finance blogs might have you thinking so,
as well as Metakovan's recent declaration
that the work will one day be worth a billion.
But of course when it comes to something
as fickle as the art market,
it's never wise to put all your money on the latest fad.
As we saw with many of the top zombie formalists,
something that's the toast of the art market one day,
can have an undignified fall from grace the next.
Take one dealer who invested $100,000
in a zombie work by Hugh Scott-Douglas in 2014,
planning to flip it for even more.
Found himself selling it for just $20,000
a mere two years later
after kind of hilariously and failing to hawk it on eBay.
He lamented,
"I feel like we were a little bit drunk
"and didn't think of the consequences.
"Then the bottom fell out.
"Everyone got stuck with their pants down."
Sounds like my first time.
Will the same be said of "Everydays"?
Maybe.
But what do you guys think?
Are NFTs the future of the art market
or just the latest bubble
in one of the weirdest luxury economies?
Let us know in the comments.
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Later.
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